Over-dependence on Global Economy
The growth of the Philippines economy drastically slowed to just 3.6% in the first three quarters of 2011, which is significantly less than the 7%-8% growth targeted by administration's Philippine Development Plan (PDP). Though the slowdown may have been due to the ongoing global crisis, it was markedly slower in comparison to other South-East Asian neighbors. Economic performance figures indicated a contraction in exports and a drop in FDI. Though the remittances from overseas Filipinos to the country grew in the first ten months of 2011, however the compensation that overseas Filipinos received actually fell, in peso terms, due to an appreciating peso.
In 2011 the Aquino administration sought a FTA (Free Trade Agreement) with the EU and join the Trans-Pacific Partnership (TPP). The administration further allowed the US to even more directly influence Philippine economic policy making in its self-interest, by entering in a Partnership for Growth (PfG). These partnerships will consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less unequal Southeast Asian countries is potentially useful. Greater attention has to be paid to addressing to the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing structural impediments to growth has to be adopted with lesser focus on foreign investors and exporters.
Unemployment
The official unemployment figures for the Philippines in 2011 are among the worst in Asia, higher than its South-East Asian neighbors and according to the International Labor Organization the country is among the worst one-fourth in the world in terms of unemployment rates. Without a strong manufacturing industry or real Filipino industry, the economy will be unable to create enough decent paying jobs. Till then manufacturing or services will remain substandard, or of low value-addition. According to employment figures, jobs in the Philippines manufacturing sector increased by just 8% of the total employment. Nearly three out of every ten people in the labor force are looking for work or are jobless. The mining sub-sector said to be one of the fastest growing industry in 2011 failed to generate new jobs (just 0.6 % of total employment).
Steadily rising inflation has contributed to the erosion of the value of the minimum wage. Though the Aquino administration increased the minimum wage and announced cash dole-outs but lack of quality decent paying jobs and higher real wages continue to be a problem. The government's policy to encourage foreign capital, even if in just low value-added assembly operations will continue to hinder real growth and development of the manufacturing sector. The Aquino administration needs to plan over the long-term, and prepare an industrialization program that encourages value-addition manufacturing or services and builds Filipino-owned industries.
Misplaced Fiscal Austerity
Practicing fiscal austerity just to get favorable credit ratings can be counterproductive. The Aquino administration, in 2011, pursued fiscal austerity and spent 2.1% less in the first 11 months than it did in the same period last year. This along with increased revenues brought down the fiscal deficit and subsequently international credit rating agencies Standard and Poor's, Moody's and Fitch upgraded the country's credit ratings and outlooks. In 2011 the government cut spending on economic services, including infrastructure, in the same vein did not fill in for shortfalls in education, health and housing sectors. As a result, over the first three quarters of 2011, income from public construction contracted by about 46% whereas government consumption reduced by a mere 1.7% in comparison to the same period last year.
Misplaced austerity measures and an exaggerated concern about credit ratings contracts the economy, reduces demand and undermines future growth. The proposed public private partnerships (PPPs) are a poor substitute to real investment and public expenditure, because the former are majorly driven by short-term profit while the latter play a vital role to create development.
These are just some of the economic challenges looming large over the Philippines. The country is facing significant decline in industrial production, gross domestic product, income and employment and sales. The Aquino presidency supposedly is getting the support of the people, as indicated by its high approval ratings, for the necessary economic measures that are in the general public interest. In 2011, the Aquino administration's policy choices to give greater weight to narrow foreign and domestic elite interests, unfortunately, underscores the challenge of pushing for real reform in 2012.
The growth of the Philippines economy drastically slowed to just 3.6% in the first three quarters of 2011, which is significantly less than the 7%-8% growth targeted by administration's Philippine Development Plan (PDP). Though the slowdown may have been due to the ongoing global crisis, it was markedly slower in comparison to other South-East Asian neighbors. Economic performance figures indicated a contraction in exports and a drop in FDI. Though the remittances from overseas Filipinos to the country grew in the first ten months of 2011, however the compensation that overseas Filipinos received actually fell, in peso terms, due to an appreciating peso.
In 2011 the Aquino administration sought a FTA (Free Trade Agreement) with the EU and join the Trans-Pacific Partnership (TPP). The administration further allowed the US to even more directly influence Philippine economic policy making in its self-interest, by entering in a Partnership for Growth (PfG). These partnerships will consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less unequal Southeast Asian countries is potentially useful. Greater attention has to be paid to addressing to the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing structural impediments to growth has to be adopted with lesser focus on foreign investors and exporters.
Unemployment
The official unemployment figures for the Philippines in 2011 are among the worst in Asia, higher than its South-East Asian neighbors and according to the International Labor Organization the country is among the worst one-fourth in the world in terms of unemployment rates. Without a strong manufacturing industry or real Filipino industry, the economy will be unable to create enough decent paying jobs. Till then manufacturing or services will remain substandard, or of low value-addition. According to employment figures, jobs in the Philippines manufacturing sector increased by just 8% of the total employment. Nearly three out of every ten people in the labor force are looking for work or are jobless. The mining sub-sector said to be one of the fastest growing industry in 2011 failed to generate new jobs (just 0.6 % of total employment).
Steadily rising inflation has contributed to the erosion of the value of the minimum wage. Though the Aquino administration increased the minimum wage and announced cash dole-outs but lack of quality decent paying jobs and higher real wages continue to be a problem. The government's policy to encourage foreign capital, even if in just low value-added assembly operations will continue to hinder real growth and development of the manufacturing sector. The Aquino administration needs to plan over the long-term, and prepare an industrialization program that encourages value-addition manufacturing or services and builds Filipino-owned industries.
Misplaced Fiscal Austerity
Practicing fiscal austerity just to get favorable credit ratings can be counterproductive. The Aquino administration, in 2011, pursued fiscal austerity and spent 2.1% less in the first 11 months than it did in the same period last year. This along with increased revenues brought down the fiscal deficit and subsequently international credit rating agencies Standard and Poor's, Moody's and Fitch upgraded the country's credit ratings and outlooks. In 2011 the government cut spending on economic services, including infrastructure, in the same vein did not fill in for shortfalls in education, health and housing sectors. As a result, over the first three quarters of 2011, income from public construction contracted by about 46% whereas government consumption reduced by a mere 1.7% in comparison to the same period last year.
Misplaced austerity measures and an exaggerated concern about credit ratings contracts the economy, reduces demand and undermines future growth. The proposed public private partnerships (PPPs) are a poor substitute to real investment and public expenditure, because the former are majorly driven by short-term profit while the latter play a vital role to create development.
These are just some of the economic challenges looming large over the Philippines. The country is facing significant decline in industrial production, gross domestic product, income and employment and sales. The Aquino presidency supposedly is getting the support of the people, as indicated by its high approval ratings, for the necessary economic measures that are in the general public interest. In 2011, the Aquino administration's policy choices to give greater weight to narrow foreign and domestic elite interests, unfortunately, underscores the challenge of pushing for real reform in 2012.
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The Philippine economy seems comparatively well-equipped to weather
the global financial crisis in the short term as a result of the
efforts over the past few years to control the fiscal deficit, bring
down debt ratios, and adopt internationally-accepted banking sector
capital adequacy standards. The Philippine banking sector -- which
comprises 80% of total financial system resources -- has limited direct
exposure to distressed financial institutions overseas (i.e., $2
billion, less than 2 percent of aggregate banking system assets).
Conservative regulatory policies, including the prohibition of
investments in structured products, shielded the insurance sector from
exposure to distressed financial firms. While direct financial exposure
to problematic investments and financial institutions is limited, the
impact of external shocks to economic growth, poverty alleviation,
employment, remittances, credit availability, and overall investment
prospects is a concern.
As what in the article stated the economy of the nation also largely depends on the remittances from
Filipinos residing overseas and investing in the homeland. However,
exports are not evenly balanced by the imports that include heavy
electronics, garments, various raw materials, intermediate goods and
fuel. The influence of the Manila galleon on the nation's economy
during the Spanish period, and bilateral trade when the country was a
colony of the United States has resulted in the preference of a mixed
economy over a centrally planned or market based one. It is very
important to understand the shift during the Ferdinand Marcos
leadership, from a market economy to a centrally planned economy, to
relate to the economic recession that the country is now facing. With
adverse global trends and the world economy entering a protracted
depression, in 2011, the Philippines faced another economic downturn.
The country's lack of internal economic strength due to the absence of
core manufacturing sector and an absence of firm and bold domestic
policy initiatives have led the economy to be dependent on the state of
the global economy. Thereby making it vulnerable to external shocks.
My view on economic, social and political system in our country Philippines is a country like all other countries. Of course every country faces economic problems yes we can say that our country is currently in bad shape but we can't blame it
solely on the politicians nobody is perfect and besides, it is a
free country, do what you want but accept the effect of what you have
done. In addition, everyone has their own characteristics, the
actions and behavior of one differs from the others so we can't judge
everybody just by looking at one person.
Philippine's economy is currently in a downward shift maybe because
majority of the leaders of the nation are lawyers and actors. Im not
saying that they dont know how to handle economy but their specialty of
knowledge is handling cases and giving entertainment respectively, they
have less information or knowledge when it comes to economic
development and another thing that mainly affect this problem is the
lifestyle of the people in the country.
For me the key to success of one country lies in its people not solely by its ruler....
